A Philosopher's Blog

The Mystery Loophole & AIG Bonuses

Posted in Business, Politics by Michael LaBossiere on March 18, 2009

While the AIG bonuses have become a national fixation (perhaps even a distraction), it seems that they are actually legal.  While Congress did place restrictions on companies who receive bailout money, someone wrote in a loophole:

iii) The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary.

Given this, the AIG bonuses are legal. Of course, they are still outrageous and morally unacceptable. Not surprisingly, people are trying to find the person responsible for this addition.  Also not surprisingly, no one is (as of this writing) claiming credit for it.

Naturally, some people suspect that someone in the pay of AIG (or some other company being bailed out) put in the loophole. That seems to have some plausibility. But, as of yet, there is no concrete evidence for this claim. However, such political dealings would seem to be business as usual in Washington.

While the number one question is about who put in the loophole, it is also important to ask how the loophole went unnoticed for so long. One hypothesis is that it was intentionally ignored by those who should have been reviewing the document. If so, they would share the blame in this fiasco. Another hypothesis is that the folks who are supposed to review the document simply failed to read it fully and carefully. In this case, their failure would not be one of malicious intent but rather one of laziness. I would like to think that such things are carefully checked before they are signed. However, I am reasonably confident that such documents are often only given a cursory review. In this case, those involved would still deserve some of the blame-their negligence allowed this to happen.

I was discussing this matter with a colleague during my office hours and jokingly suggested that if no one admits to writing the loophole, then it should be treated as a typo or mistaken inclusion. As such, it should simply be deleted. After all, if no one with the official right or power included that loop hole, then it is not a legitimate part of the law. After all, if I were to sneak some text into the document and it was signed, surely it would not thus become law. Likewise for this mystery loophole-unless it can be shown that it was legitimately added, we should treat it as an illegal inclusion and it should be removed immediately.

If I am wrong about this and any text in such a document becomes law when signed, I plan to make a quick trip to DC to start changing laws-beginning with making myself tax exempt and the recipient of federal funding.

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5 Responses

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  1. kernunos said, on March 18, 2009 at 8:48 pm

    There is no mystery to the loophole. It was money that should not have been introduced in the first place. This is what happens when Liberals play DR Frankenstein with the economy. Maybe they should put John Stewart in charge. He did get the best of Jim Kramer didn’t he? That makes him an economic genius right? I have come to the conclusion that Liberals want nothing more than to destroy America. It is the only thing that makes sense. They cannot possibly think that government spending helps the economy. If so, why don’t we just get rid of all free enterprise and just have government jobs? That would work, right Liberals?

  2. Michael LaBossiere said, on March 18, 2009 at 9:58 pm

    I thought liberals were supposed to hate capitalists and business? Why would they put in a loophole that benefits rich corporate types? :)

  3. magus71 said, on March 19, 2009 at 8:41 am

    By mistake, that’s how. One giant mistake.

  4. Kernunos said, on March 21, 2009 at 9:46 am

    It was not a mistake. You heard Chris Dodd get caught is his lie. He put it there on purpose in the writing of the bill.

    http://www.foxbusiness.com/story/markets/industries/finance/dodd-cracks-aig—time/

    Do we remember where Chris Dodd’s name came up before with big campaign contributions? Yes, that’s right he was the #1 campaign recipient of funds from Fannie and Freddy with Obama as #2.

    The biggest contribution made to any coampaign was to Chris Dodd’s and he wrote this crap. Wake up people! It isn’t just Republicans that are tied in with big business.

    If you haven’t guessed why all of this is happening yet then you do not get your cookie. These banking institutions are loaded with Democrats at the top. This is just payback for getting them into office with the cash. A little “wag the dog” and everyone is ready to take up pitchforks against these evil CEOs except the angry mob has the wrong target. They should be going after the politicians that have orchestrated this fleecing…..

  5. magus71 said, on March 22, 2009 at 5:19 am

    I use the term “mistake”, loosely of course. What I really mean is that this whole administration is a giant mistake.

    It’s one of the biggest myths in American politics that Republicans are more tied to big business than Dems. Check out Nancy Pelosi’s finances. She’s a millionaire. So isn’t Obama of course. This whole thing reminds me of Robespierre whipping the peasantry into a destructive mob. Instead of French Nobility losing their heads under the guillotine, it’s the heads of “Big Business.”

    “Let them eat peanut butter and government cheese!”

    Obama and the Dems are masters of populism. I’m not sure anyone can beat that.


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